Most major companies concerned with corporate responsibility issues acknowledge that they lack an active strategy to develop new business opportunities arising from meeting these citizenship and sustainability needs, according to a report released November 10 by The Conference Board.

 

The report is based on a new survey of 198 medium to large multinational companies. It is the first report issued by The Center for Corporate Citizenship & Sustainability, just launched by The Conference Board, to help senior executives seize opportunities and avert risks stemming from corporate social responsibility issues.

 

Nearly half (46 percent) of the responding companies say that corporate citizenship and sustainability are major sources of business opportunity and not only sources of business risk alone. When added to the 44 percent who see these issues as sources of both risk and opportunity, a total of 90 percent of participating companies say their company’s approach to corporate citizenship and sustainability issues reflects at least some belief in the potential rewards.

 

Citizenship and Sustainability Struggling to Gain Top-Executive Mindshare
“This mixed perspective of a glass more than half full of market awareness and nearly half empty of product response demonstrates that there is work to be done in bringing corporate citizenship, sustainability, or ‘CSR’ programs to the forefront of top executives’ minds,” says David J. Vidal, research director, Global Corporate Citizenship, The Conference Board.

 

Two-thirds of survey participants say that corporate citizenship and sustainability issues are of growing importance for their businesses. But the absence of a link between an awareness of these issues and a verifiable means of extracting a business benefit from them was further underscored in survey respondents’ choices of the three greatest challenges currently facing citizenship programs: measuring results (cited by 75 percent); coping with limited financial and staffing resources (58 percent); and aligning with business objectives (57 percent).

 

While the majority of companies say they are not active in citizenship and sustainability-related business product development, a majority (62 percent) have formal programs to manage their corporate citizenship and sustainability practice. Another 35 percent lack a formal program but conduct regular reviews of these activities.

 

The top three activities that are the focus of current citizenship and sustainability attention are community and stakeholder involvement (64 percent), corporate giving to worthy causes (55 percent), and environmental sustainability/climate change (52 percent).

 

Boosting Corporate Reputation
Ninety-two percent of companies surveyed cite “enhancing corporate reputation and brand” as an “extremely important” (55 percent) or “very important” (37 percent) internal driver of their corporate citizenship programs. No other choice came close in importance. Twenty-six percent say that “managing corporate reputation and brand” is one of the top three challenges they face today.

 

Recruiting and retaining talent is second in importance with a combined rating of 78 percent (42 percent “very important” and 36 percent “extremely important”); reducing risk is third (64 percent total: 36 percent “very important” and 28 percent “extremely important”); and developing innovative products and services fourth at 60 percent (31 percent “very important” and 29 percent “extremely important”).

 

Citizenship and Sustainability Programs Moving Up in Priority
Survey participants named the C-suite board of directors and employees as the two major internal stakeholder groups with the most influence on corporate citizenship and sustainability issues.

 

The C-suite and the board earn a 76 percent mention (27 percent “extremely important” and 49 percent “very important”) and employees 71 percent (22 percent “extremely important” and 49 percent “very important”).

 

“This indicates that the migration of these issues up the corporate authority chain is well under way, and that the internalization of these issues by employee groups is also significant,” says Vidal.

Boards of directors are routinely engaged in reviewing citizenship and sustainability activities at 49 percent of responding companies, while another 40 percent say that their boards do this only from time to time. Only 11 percent indicate no board review involvement at all on these issues.

 

Among purely or largely external stakeholder groups, the order of influence on company citizenship policies is local communities at 70 percent (25 percent “extremely important” and 45 percent “very important”); customers and consumers at 65 percent (25 percent extremely important” and 40 percent “very important”); and shareholders at 52 percent (23 percent “extremely important” and 29 percent “very important”).

 

The influence of shareholders is considered roughly equal to that of governments — 51 percent (19 percent “extremely important” and 32 percent “very important”). The measure of influence of financial institutions and investors on corporate citizenship and sustainability policies is recognized by 43 percent of respondents (16 percent “extremely important” and 27 percent “very important”).

 

Non-governmental organizations (NGOs) and the media, once important forces in designing corporate citizenship policies, now rank last (37 percent and 27 percent, respectively).

 

Most companies surveyed (71 percent) report publicly on citizenship and sustainability performance. A total of 52 percent do so in self-standing annual corporate citizenship/social responsibility reports apart from their annual financial reports. A substantial 40 percent reference these matters in their annual reports.